CNBC AI News, July 14th – In a surprising turn of events, AI programming startup Windsurf, previously slated for a $3 billion acquisition by OpenAI, has abruptly called off the deal and inked a partnership with Google, according to media reports. The announcement came Friday, leaving the AI world buzzing.
Google’s DeepMind is actively recruiting Windsurf’s CEO Varun Mohan, co-founder Douglas Chen, and several key research personnel. While Google isn’t taking an equity stake or acquiring control, it’s reportedly committing $2.4 billion for a licensing agreement to utilize Windsurf’s technology and bring aboard its top talent.
Under the agreement, Google will gain a non-exclusive license to certain Windsurf technologies. This critical detail means Windsurf retains the ability to license these same technologies to other companies, preserving its independence and revenue streams. A Google spokesperson confirmed the move, stating, “We are thrilled to welcome Windsurf’s exceptional AI programming talent to Google DeepMind, where they will contribute to our advancements in agent coding.”
This collaboration heralds a novel “reverse acquisition” strategy in the AI landscape. Instead of outright acquisitions, tech giants are leveraging strategic talent acquisitions and technology licensing to rapidly enhance their capabilities. Both Google and Microsoft have previously employed similar tactics— seen in Google’s rehiring of Character.AI’s CEO and Microsoft’s hire of Mustafa Suleyman — showcasing a growing trend in the industry.
Following the deal’s announcement, Windsurf’s head of operations, Jeff Wang, will assume the role of interim CEO. Significantly, the majority of Windsurf’s 250-person team will remain in place, continuing to provide AI programming tools to their enterprise clients and ensuring business continuity.
Windsurf has emerged as one of the hottest AI programming startups in recent years, fueled by impressive growth metrics. The company’s annual recurring revenue (ARR) reached approximately $100 million in April, a substantial leap from $40 million just months prior. This rapid ascent attracted the attention of industry heavyweights like OpenAI and Google, triggering a competitive pursuit.
The addition of Mohan, Chen, and other key leaders is expected to significantly bolster Google’s ability to build advanced AI programming tools. AI model providers are increasingly prioritizing developer engagement through programming applications. Anthropic’s Claude Code has demonstrably driven revenue growth, and OpenAI continues to actively promote its Codex agent, underscoring the strategic importance of this sector.
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